Cypriots and Maltese quickly starting to use
the euro

Cyprus and Malta adopted the euro on 1 January. All
available evidence suggests that the changeover operation is proceeding very
smoothly and without any noteworthy incidents. On 2 January, a significant
number of cash transactions were already carried out in euro in both countries,
and around 40% of citizens had only or mostly euro cash in their wallets and
purses.

Since 1 January, the euro is the official currency of Cyprus and Malta, and
euro banknotes and coins are therefore now legal tender on both islands.

On 2 January, retailers gave change exclusively in euro in 92% (Cyprus) and
91% (Malta) of all cash transactions effected, according to a survey conducted
for the European Commission. In Malta, cash payments were taking place smoothly
after a few initial cases of shortage of change at retail outlets, particularly
on 1 January when banks were still closed and some customers were using up large
denomination banknotes in the old national currency to avoid having to exchange
them at banks later. The start of the winter sales on 2 January in Malta also
increased the amount of cash transactions but no serious complications were
reported.

Asked about which currency they had in their wallets and purses on 2 January,
12% of respondents in Cyprus had only euro banknotes, while an additional 31%
were carrying ‘mostly’ euro banknotes, according to the Commission
survey. The respective figures for coins were 20% and 26%. In Malta, 42% had
only or mostly euro banknotes, and as many as 52% had only or mostly euro coins
in their wallets.

As regards cash payments on 2 January, 28% of the Cypriots said they had paid
in euro, while 68% still used the national currency. The respective figures for
Malta were 36% and 58%. In both cases, the results compare favourably with those
of a similar survey conducted when Slovenia adopted the euro in 2007, when only
one in five Slovene citizens (19%) paid in euro on the first working day. The
dual circulation period during which citizens can still pay in Cyprus pounds and
Maltese lire, in parallel with the euro, extends until 31 January 2008 in both
countries.

As people are eager to exchange national cash into euro and to withdraw euro
cash, some queues at banks and ATMs were reported in both Cyprus and Malta. Some
banks have established special counters to facilitate cash exchanges and
withdrawals for business customers, in order to reduce waiting times.

Overall, the changeover process appears to have gone according to plan in
both countries. Since 1 January, euro banknotes have been available from ATMs
(cash dispensers) in both countries. All 550 ATMs in Cyprus and all 154 in Malta
were successfully converted to dispense euro banknotes during the first day of
the new year, the large majority by noon. In Cyprus, some 50 000 cash
withdrawals at ATMs took place on 1 and 2 January, for a total amount of €
5.97 million. In Malta, 64 800 ATM withdrawals were made, totalling € 7.02
million.

In Cyprus, bank branches opened exceptionally already on 1 January to allow
for cash exchanges and withdrawals of euro cash. On 1 and 2 January, a total of
€ 116 million was withdrawn over the counter. In Malta, by contrast, banks
remained closed on 1 January, but on 2 January some 38 000 withdrawals or
exchanges were made (for a total of € 20.7 million).

Many citizens had also acquired euro cash before € day: in the course
of December, Cypriots bought a total of around 105 000 euro coin mini-kits
(worth € 17.09 each), while in Malta approximately 160 000 mini-kits
(worth € 11.65 each) were sold.

Regarding the conversion of prices into euros, so far only a few limited
incidents of undue price increases have been reported in both countries. The
authorities are investigating them, and will take action if needed. In Malta,
for example, the prices at certain car parks have increased. The authorities
have asked those responsible to revert to the former prices within one week,
failing which fines will be imposed. Consumers are encouraged to be even more
vigilant and assertive during this period than usual.